Improving Retail Supply Flexibility using Buyer-Supplier Relational Capabilities

Purpose This study investigates the mediating role of three important relational capabilities - Absorptive Capacity, Transactive Memory Systems, and Organizational Interoperability; on the flexibility of buyer-supplier relationships and performance in retail supply chains. Drawing on the Relational view of strategic management, the impact of relational capabilities on two forms of supply chain flexibility is examined – (a) Configuration Flexibility for switching suppliers with minimal penalties and (b) Planning and Control Flexibility for altering supply schedules, quality, and delivery lead-time. Design/methodology/approach Strategic and tactical level managers from 211 retail stores in the UK were surveyed. We validated a measurement model with structural equation modeling, and tested four hypotheses on the mediating role of relational capabilities on supply chain flexibility and retail performance, controlling for size, duration of relationship and market segment. Findings Results showed that the three relational capabilities partially mediated the positive effect of configuration flexibility and planning and control flexibility on operational performance in big-middle and niche retailers. Examining the interaction effect of the forms of flexibility on the relational capabilities and performance, we found positive interaction effects on Transactive Memory Systems and Organizational Interoperability but a non-significant effect on Absorptive Capacity. Practical Implications In addition to providing novel theoretical insights on supply chain flexibility, our findings have practical implications for supplier selection and buyer-supplier relationship management. Originality/value Overall, the study highlights the impacts of relational capabilities on adopted operational strategies such as flexibility, buyer-supplier relationships, and retail performance